Joint IWCAM-IABIN WorkshopJamaica March 10-12, 2008

Capturing ecotourism benefit values in Marine Parks:

Montego Bay Marine Park, Jamaica Richard Huber Organization of American States

Most efficient way to raise money to fix environmental deterioration and

sustainably manage natural resource• Relationship made between ecosystems and the

value of economic goods and services

• Who should rightfully retain rents or net benefit values earned through the use of the environment?

• Hotel room view – proximity to noisy highway

• Tour operators “feel” the true costs associated with using the protected area.

Changes in Ecuador’s largest sea port: Gulf of Guayaquil, Ecuador

Ecuador’s primary city and largest sea port

1985-2000: Loss of mangrove and growth of aquaculture can be seen

Shrimp farms replacing mangroves in Gulf of Fonseca, Honduras

1987-1999: shrimp farms and ponds have mushroomed, carpeting the landscape around the Gulf of Fonseca, Honduras, in blocks of blue and black shapes

Urban encroachment on Florida’s Everglades, United States

• 1973: Rapid urban expansion has converted farmlands to cityscapes

• 2002: Existence of vast wetlands “Everglades” threatened by urban encroachment

Coral reef ecology

• Decline from 50% coral cover in 1970’s to 5% in 1990s

• Hughes -- Overfishing, hurricane damage and disease -- Hurricane Allen (1980)

• La Point -- Phase shift from coral to macroalgal dominance -- Nitrogen and Phosphorous highest concentrations worldwide

• TNC - REA -- nutrient loading, changes in current circulation, and mechanical damage

• Pigott and Land 1986 - submarine groundwater discharges

• Large scale non-point source nutrient loading associated with deforestation sewage, ag and ind developments.

What Triggers ICZM program?

• Decentralization and local autonomy Debt-Swap

• Desire to increase economic benefits flowing from use of the Coastal Zone

• Serious resource depletion problems and damage to productive coastal areas increasing pollution of marine environment and loss of life and property

• Perceived economic opportunities associated with new forms of development

• conflicts of interest among user groups

Integrating Scientific Data & Expert Opinion to improve coral reef health

& How to generate revenue

What is the most cost effective means for achieving a given level of coral reef quality as expressed by percent coral cover?

R e se arc h

A con ventio nal framew ork for econo m ic optim iz at ion an aly sis

0

Coral Reef Quality (E)

C ($/unit)

C1

C2

C3C4

C5

C6

C7

C8

Cs= Measure of cost-effectiveness in reducing effect/impact indicator "E" by intervention 's'E= Quality indicators= policy intervention or investmentB*-B* = Marginal environmental benefits associated with reducing quality indicator E

B*

B*

Mar

gin

al C

ost

($/

ton

of

C)

Individual or comunal land tenure security

Taxes and fees that restrict cattle expansion and logging

Restrict soy expansion by elimination of subsidies for energy inputs, pesticides, fertilizers, and irrigation water

Millions of Tons of Carbon Emissions Avoided

Marginal Cost Policies for Reducing Forest Carbon Emissions

Policies that reduce Forest fires

Establish tradeable permits to protect strategic forests

Policies that have no net financial costs for Governments and that contribute to both economic efficiency and environmental protection.

Public and private investments that have positive net economic benefits but require institutional monitoring

Eliminate subsidies for logging and ranching

Establish certified tradeable offset carbon sequesration program

PES program subsidized by global benefits

The EconomicsValuation Methods

• Cunard Liner hit a reef in Gulf of Aquaba Egyptians sought $23m or $10k/m2

• Direct use valuation - estimating the lost productivity or value in the absence of proper protection or conservation

• Contingent valuation - estimating the benefits derived from “public goods”

Use values Non-use values

Direct use values

Outputs/services that can be consumed directly

Extractive (capture fisheries, mariculture, aquarium trade, pharmaceutical)

Non-extractive (tourism/recreation, research/education, aesthetic)

Indirect use values

Functional benefits enjoyed indirectly

Biological support to sea bird, turtle, fisheriesPhysical protection to other coastal ecosystems, coastline, navigation)Global life-support in terms of carbon storage

Bequest, option and existence values

Functions that value either the future use, expected new information and based on moral convictions

Endangered and charismatic species Threatened reef habitats Aesthetic reefscapes ‘Way of life’ linked to traditional use

Total Economic Value (TEV)

Use values Non-use values

Direct use values

Outputs/services that can be consumed directly

Extractive (capture fisheries, mariculture, aquarium trade, pharmaceutical)

Non-extractive (tourism/recreation, research/education, aesthetic)

Indirect use values

Functional benefits enjoyed indirectly

Biological support to sea bird, turtle, fisheriesPhysical protection to other coastal ecosystems, coastline, navigation)Global life-support in terms of carbon storage

Bequest, option and existence values

Functions that value either the future use, expected new information and based on moral convictions

Endangered and charismatic species Threatened reef habitats Aesthetic reefscapes ‘Way of life’ linked to traditional use

Total Economic Value (TEV)

The EconomicsCreating the Benefits Function

Valuation methods and site-specific economic survey data to create the benefits function - to be used as educational and planning tool to assist policymakers

• Fishery NPV -- $1.31 million

• Tourism and Recreation NPV -- $315 m

• Coastal Protection Function -- $65 million

Policy Instruments Classified by Flexibility in Individual Decisionmaking

<----Minimum Flexibility----> <----Moderate Flexibility----> <----Maximum Flexibility----><----Maxiumum Government Involvement---> <----Increased Private Initiative----><Control Oriented> <-----------Market-Oriented-----------> <----Litigation Oriented---->Regulations andSanctions

Charges, Taxes, andFees

Market Creation Final DemandIntervention

Liability Legislation

General ExamplesGovernmentrestricts nature andamount ofpollution resourceuse for individualpolluters orresource users

Governmentcharges fee toindividual pollutersbased on amountof pollution orresource use.

Governmentestablishes systemof tradable permitsfor pollution orresource use andthen monitorscompliance

Governmentsupports labellingor performancerating program thatrequires disclosureof environmentalinformation.

Polluter or resourceuser is required bylaw to pay anydamages to thoseaffected throughcourt system.

Specific Examples Pollution

Standards Land use

restrictions Construction

impactregulations

Fines, Bans,and Quotas

Greening ofconventionaltaxes

Taxes affectingtransportationchoice

User chargesfor water

Source-basedeffluentcharges

Deposit-refund systemsfor solid andhazardouswastes

Tradablepermits forwater and airpollutionemissions

ConsumerProductLabeling

Disclosurelegislationrequiringmanufacturersto publishwasteinformation

Blacklist ofpolluters

DamagesCompensation

Liability onneglectingfirm’smanagers andenvironmentalauthorities

Source: Huber et al. 1999

Global Optimization using combined cost and benefit functions

• Optimal improvement of coral reef abundance of 13% requiring net expenditures of $27m

• Interventions -- installation of sediment trap, waste aeration, sewage outfall, improved SWM collection, and implementation of economic incentives to improve waste management by the hotel industry.

• Financing -- Voluntary $1/Night Hotel Tax earmarked hotel room fee of US$1 per bed-night, to lead to an annual revenue of approximately US$1.5 million.

MODIS Rapid Response Fire Detections for 2004

Year 2000

26%

42%

45%

•Contingent valuation method (CMV) trust fund managed by the Park •Payment for a 25% increase in coral reef cover. •Willingness to pay (WTP) was estimated as US$3.24 per person in Jamaica •Estimated WTP of approximately US$20 million in Montego Bay (Spash et al. 2000).•Jamaicans had a mean expected WTP of US$3.75, while typical tourists had a mean expected WTP of US$2.73.•150,000 stopover tourists a year visiting Montego Bay, consumer surplus (WTP) total approximately US$410,000 •A NPV of US$1,708,000 (10% discount rate) over the five year stream of the payment scenario.

Establishment of a Public-private Partnership Matching Fund

Goal: Community-Based Restoration Program to restore important habitat and foster long-term environmental stewardship among citizens.

Objective: Restore Mobay’s most productive ecosystems mangroves, estuaries, coral reefs for on-the-ground habitat restoration projects through establishment of a dive and yacht mooring fee.

On-the-ground restoration projects: fish/lobster trap education and redsign; estuary and coral reef restoration, cleaning of storm water channels, a pilot volunteer stewardship and monitoring program, native plant propagation and planting, exotic plant removal, bulkhead removal, marsh creation, re-vegetation and reconstruction of barrier islands, streamside forest buffers, shoreline restoration, creek and storm water clean-ups, informational signage, and water quality monitoring.

Canaima National Park Venezuela

• Larger than Belgium• Tepui summits, steep flat-

topped table mountains• 100k visits/year• 17.7 million kW/yr

valued at 1.2k/kW

Canaima National Park Venezuela

• if unchecked deforestation occurred in the fragile Caroní basin, the power capacity of the hydroelectric system would be reduced between 10% and 15% when the project useful life was half over.

Canaima National Park Venezuela

• Charge US$10 for international visitors and US$4 for Venezuelan residents

• US$1 per overnight stay in the park, to lead to an annual revenue of approximately US$5.0 million.

The End